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After a record-breaking rally and a roaring rebound, the question is whether stocks will finish out this holiday-shortened week building on the positive momentum from the past two sessions and take the market into its third day of post-Christmas gains.

There’s not much in the way of major economic data releases today, and earnings season doesn’t start in earnest until next month. That leaves market participants to scan the headlines for news on the main themes they’ve been watching.

Arguably the biggest overhang for the market at the moment is the ongoing trade war between the United States and China that has raised concerns about global economic growth. On top of that, the U.S. remains in a partial government shutdown, political risks continue to emanate from Europe, and it seems likely that concerns over the Fed’s monetary policy continue to weigh.

Add to that the market’s recent ups and downs and it doesn’t seem like a wonder that Wall Street’s fear gauge, the Cboe Volatility Index (VIX) remains around 30, gold is near a six-month high and the 10-year Treasury yield is well below the key 3% mark.

Market Takes a U-Turn Into Green

For much of Thursday’s trading, it was looking like the previous session’s sharp gains were going to be a one-off. But late in the trading day, stocks staged a remarkable comeback that left the Dow Jones Industrial Average ($DJI) up more than 1% a day after it recorded its largest single-day point gain.

The rally didn’t seem to be sparked by any headlines. In fact, for much of the day, headline-based sentiment on Wall Street seemed decidedly negative amid worries about the U.S.-China relationship and disappointing consumer confidence data.

So it may be a case of thin volumes helping to exaggerate market volatility. It seems likely that many traders and investors are out of the office for the holiday period around Christmas and New Year’s Day. In a similar situation to yesterday, volume in S&P 500 (SPX) stocks was substantially below average, and volume in Nasdaq Composite (COMP) equities was also light. Meanwhile trading volume for $DJI equities was heavier than average.

Risk Switch Was Off Before It Was On

A key driver of the bearish sentiment before the turnaround Thursday appeared to be a weaker than expected reading on consumer confidence. The Conference Board’s December index on consumer confidence fell to 128.1 from an 136.4. The reading was well shy of the 133.7 expected by economists in a consensus posted by Briefing.com. (See more below.)

In addition to worries about consumer confidence, investors early in the day were likely focusing on a Reuters report saying that the Trump administration is considering banning U.S. companies from purchasing telecommunications equipment from Chinese firms Huawei and ZTE.

That arguably helped to sap investor confidence for much of the day and boost demand for perceived safe-haven investments. Gold advanced, likely helped by safe-haven buying and weakness in the U.S. dollar. Meanwhile, U.S. government debt was also in demand, with yields falling as investors bought Treasuries.

As investments that are perceived to be safer (although no investment is completely safe) gained ground, oil declined. Commodities are often considered riskier investments as they can experience significant volatility.

Concerns about the health of the global economy and what that could mean for oil demand, as well as lingering worries about a glut of supply, have also been helping to severely pressure oil prices in recent weeks.

FIGURE 1: CHANGE IN MOMENTUM? While this month has seen a number of outsize moves, both up and down, the momentum appears to have been largely to the downside in the S&P 500 Index (SPX - candlestick chart). Some chart watchers would point to Wednesday's rally and Thursday's afternoon comeback as an indication of upside momentum. The lower study in the above chart shows the Moving Average Convergence/Divergence (MACD), which is designed to indicate trend strength. Data source: S&P Dow Jones Indices. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

Consumers Eye 2019 With Less Optimism … Thursday’s weaker-than-forecast consumer confidence data comes as investors appear to be increasingly worried about the pace of global economic growth next year. The United States is a big driver of global growth, and the consumer makes up the largest single portion of America’s gross domestic product. But the Conference Board’s data come a day after a Mastercard Inc. (NYSE: MA) report showedholiday sales increased 5.1 percent year over year to more than $850 billion this year. That seems to suggest that at least from Nov. 1 to Christmas Eve, consumers were feeling pretty jolly. Of course the losses on Wall Street might be trickling down to Main Street by now, potentially prompting some family budget tightening next year, even as many people’s resolutions for the new year may include a diet to tighten their actual belts after holiday merrymaking. “While consumers are ending 2018 on a strong note, back-to-back declines in (the) expectations (index) are reflective of an increasing concern that the pace of economic growth will begin moderating in the first half of 2019,” Lynn Franco, senior director of economic indicators at the Conference Board, said Thursday in a press release.

… But They May End Up With More Cash: Although the latest consumer confidence figures came in below expectations, there are a couple of factors out there that may help confidence readings in the future. One is gasoline prices. With crude oil taking it on the chin in recent weeks, gasoline prices have also been coming down, increasing many consumers’ available cash. According to AAA on Thursday, “nearly 20 percent of states are currently enjoying prices below $2.00 per gallon” and national retail averages have fallen in 83 of the past 90 days. Another potential boon for consumers’ wallets is tax return season. UBS estimates an increase in overall refunds of between $42 billion and $66 billion versus the 2017 tax year, according to a recent research note, as reported by Business Insider. According to UBS' estimates, the most sizeable gains will go to households making under $40,000 a year and to those with incomes between $125,000 and $400,000.

Jobs Market Remains Robust: The weekly government unemployment report doesn’t usually get as much ink in the press as, say, the monthly jobs report. But keeping an eye on the data, especially the four-week moving average, can be helpful for keeping up with the pulse of the labor market, a key factor in inflation expectations. For the week ending Dec. 22 initial unemployment claims fell by 1,000 to 216,000, while the four-week moving average dropped by 4,750 to 218,000. “The key takeaway from the report is that initial claims continue to print at low levels that don’t suggest any meaningful softening has occurred in the labor market despite the concerns about a slower growth outlook,” Briefing.com said.